Business

Pizza’s Pandemic Growth Cools as Domino’s Reports Sales Decline

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Pizza’s large achieve in the course of the pandemic is beginning to lose momentum.

Similar-store gross sales at

Domino’s Pizza Inc.’s


DPZ 2.00%

U.S. shops dropped 1.9% within the three months via early September in contrast with the identical interval final 12 months, the corporate stated Thursday. It’s the firm’s first U.S. same-store gross sales decline in additional than a decade, in response to FactSet knowledge, and a reversal from as just lately because the prior quarter when gross sales have been nonetheless rising.

Domino’s and rival chains Pizza Hut and

Papa John’s International Inc.

benefited final 12 months from a flood of delivery and takeout orders as eating places closed eating rooms in the course of the pandemic. Now, most eating places have reopened their eating rooms, slowing the expansion in supply gross sales. Almost 30% of U.S. diners stated they anticipated to order supply much less from eating places sooner or later, in response to a survey final month of 963 People by trade analysis agency Income Administration Options.

Domino’s attributed among the decline in U.S. orders to a discount in federal stimulus funds to shoppers in the course of the interval. Springtime authorities funds that helped the chain and different eating places didn’t happen once more over the summer season, decreasing gross sales, the corporate stated. Supply gross sales significantly have been harm by fewer funds going to U.S. shoppers, Chief Govt

Ritch Allison

instructed traders.

Ongoing staffing issues additionally resulted in Domino’s shops shortening hours and repair, miserable gross sales, the Ann Arbor, Mich.-based firm stated. Staffing issues, and the added burden for employees that firms do have, is an increasingly common challenge throughout industries from manufacturing and healthcare to air journey.

The corporate stated it’s attempting to steer extra clients to its carryout enterprise, on account of a scarcity of supply drivers. “There isn’t a doubt that we are going to proceed to expertise challenges with Covid with staffing and different elements,” Mr. Allison stated.

Domino’s shares rose 2% in morning buying and selling to $488, recovering after they fell premarket.

Eating places have had a bumpy 12 months as the Delta variant of the virus in latest weeks depressed renewed dine-in gross sales progress. Rising provide and labor prices are consuming into earnings, and trade executives expect rising inflation to additional crimp their margins subsequent 12 months. Eating places are passing alongside the prices to shoppers, with fast-food costs up 6.7% over the 12 months ending in September in contrast with a 12 months earlier, in response to Labor Division knowledge.

Mr. Allison stated he anticipated labor to proceed to be an issue as folks have left the workforce and immigration to the U.S. has fallen. The chain stated it’s elevating wages to attempt to recruit employees, and attempting to make its eating places extra environment friendly to scale back labor hours.

Domino’s posted gross sales of $998 million for the three months ended Sept. 12, lower than the $1.03 billion anticipated by analysts polled by FactSet. Domino’s reported revenue of $3.24 a share, adjusted for one-time gadgets. Analysts had anticipated a revenue of $3.11 a share.

Worldwide, 323 new Domino’s shops opened within the quarter, together with 45 within the U.S. Mr. Allison stated that provide chain hurdles and allowing delays resulted in fewer U.S. shops opening than he had hoped.

Domino’s stated Thursday that it expects its U.S. worth inflation for subsequent 12 months to hit the excessive facet of its projected steering given labor and commodity pressures.

Domino’s and Eating Developments

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Write to Heather Haddon at heather.haddon@wsj.com

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